Bond Markets & FX Effects by Tyler Yell
The actions of the central banks have significant effects on the financial markets. In this article, we look at the bond markets to see how they can impact the forex markets.
In an annual letter to shareholders, JPMorgan Chase CEO Jamie Dimon said the bond market and the volatility that is likely to come is a core concern and would have major impacts in forex. The sharp spike in prices and subsequent drop in yields on October 15, 2014 confirmed his fears and should keep you on high alert of this nearly $93 trillion market.
This article will unpack Dimon’s statement and walk you through an overview of the state of the bond market, the effects of quantitative easing (QE) on the bond market, and how bonds affect trading capital flows and therefore forex prices. In addition, I’ll look at common occurrences between QE, bond prices & yields, capital flow, and opportunities from resulting forex moves...